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The brave new world of digital personal assistants: benefits and challenges from an economic perspective

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Abstract

The paper applies modern industrial economic theories to give an overview of the emerging phenomenon of digital personal assistants (DPAs). A DPA is an automated system that serves personal usage only and interacts with the user in natural language, meanwhile applying original and third-party services to obtain information and perform various actions. We analyze the economic benefits of increasing usage of DPAs, such as reduction of transaction costs, procompetitive effects, and boosting the e-commerce economy. Besides benefits, however, adopting DPA in life may also contain some risks and downsides, which may reduce the positive welfare effects or even lead to decreasing welfare: biased services, market power on the DPA market and economic dependence on a dominant DPA, potential leveraging of DPA suppliers’ market power into neighboring markets, personalized data (ab)use and privacy, media bias and manipulation of public opinion, and loss of autonomy. We identify the degree of effective competition and the degree of rationality of consumer behavior as the most relevant factors for either the advantages or the disadvantages to prevail and derive first regulatory implications.

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Notes

  1. For example, phones, tablets, laptops.

  2. This is a type of program that is available to be downloaded in App stores from different suppliers.

  3. There are also other classifications pointing out main technological differences. For example, Knote et al. [41] applied empirical cluster analysis in order to get an overview of the landscape of existing solutions. However, this analysis provides information about possible technological development rather than about an economical one. These classifications usually include not only individual, but also some business solutions, which are excluded from our consideration.

  4. At the Consumer Electronics Show (CES), tech giants have announced that they will add DPAs to new cars. Thus, Nissan and BMW have Microsoft Cortana or Apple’s Siri (via CarPlay software) on some models, Ford has a cooperation with Apple and Amazon (Alexa), Hyundai, by its turn, integrated Google Assistant and Apple’s Siri in some vehicles, Daimler provides only Google Assistant [10].

  5. Amazon has recently bought the U.S. supermarket chain Whole Foods and, in a parallel movement, opened its own supermarket in the U.S. [5, 59].

  6. Regulations can be, inter alia, data policy transparency, artificial barriers reduction, and compatibility of the algorithms. [26]

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  1. Institute of Economics, Institute of Media and Mobile Communication, Ilmenau University of Technology, Ilmenau, Germany

    Oliver Budzinski, Victoriia Noskova & Xijie Zhang

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  1. Oliver Budzinski
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Correspondence to Oliver Budzinski.

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Budzinski, O., Noskova, V. & Zhang, X. The brave new world of digital personal assistants: benefits and challenges from an economic perspective. Netnomics 20, 177–194 (2019). https://doi.org/10.1007/s11066-019-09133-4

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